90% Marginal Tax Rate for the Middle Class

I gave some thought about how those making above $160K (for a couple) aren't welcome to receive the $7,500 First Time Buyer's tax credit and realized that we're actually getting more screwed than I originally thought.

You see, the phase out for this tax credit starts at $140K runs to $160K; so it's a total of 20K in income that determines whether you get the full $7,500 or zilch. It works the same way for the Bushie tax credit: with two kids at $140K in annual income you'd get $1,200, but at $160K in income again, you'd get zilch. That is one expensive $20K in income, but how expensive is really?

On 2oK we suffer the following losses and taxes:

$7,500 exclusion from First Time Buyer's Credit
$1,200 exclusion from Bushie Tax Credit
$7,200 Federal Taxes (would have paid regardless)
$1,800 State Taxes (ditto)

For a grand total of $17,700 in taxes or loss of tax credits or the equivalent of a 90% marginal tax rate. 90%! I defy any reader to find a single group in America that pays the same effective tax rate as this 140K to 160K income group.

Have we all done something to offend those in power? If so, how did we manage to piss off both sides of the aisle and the legislative and executive branches of government at the same time. (Let's remember that is was W who had us excluded from the "stimulus package" and it was Speaker Pelosi who sponsored this lovely First Time Buyers legislation.)

Well, I really don't think we've done anything to offend any one. I'd like to think of it as an 'oversight.' That our lawmaker's didn't mean to screw us and that some of the details fell through the cracks and that the 90% effective tax rate is just a big mistake. And mistake that ought to be rectified immediately.

I've already emailed Bush, Boxer, Feinstien and my Congressman Dana Rohrabacher; I'd invite you to do the same. No group in the US should be asked to pay a 90% marginal tax rate. It's unfair, it's unAmerican and it's anti-capatilist.

Call or write your representatives today!

Feds Set to Screw OC's Middle Class Again!

Many of middle-class families in OC are still stinging from being excluded from Bush's tax rebate program. While many of our friends got checks of up to $1,200, we got nothing. The reason? We made a bit too much money to be included and were summarily "phased out" of that particular gravy train.

Guess what? You're about to be "phased out" again.

Yesterday, the House passed HR 3221 aka the American Housing Rescue and Foreclosure Prevention Act of 2008 on May 8, 2008. This piece of homedebtor rescue legislation spends billions helping those folks in trouble keep their homes, to refinance existing mortgages, for cities buy blighted properties and so on. So, if you're were unfortunate enough to have bought a house that you couldn't afford, the taxpayers are here to bail you out.

You're welcome.

Then there's this little provision called "First-Time Homebuyer Credit" which essentially says that if you are a first-time homebuyer then you can get a $3,750 federal tax credit if you are an individual or $7,500 if you are a couple. That, unless you're middle-class, then you get nothing.

That's right, if, as an indvidual, you make more than $90K a year or a couple that makes more than $160,000 a year, then your tax credit amount falls to zero. Zero as in nothing. Zero dollars, zero help, zero consideration by your legislators. Zero, just like the tax credit you got as part of the Bush stimulus package.

That's right, once again the Congress has left the American middle class out in the cold. If you're Bear Steans, the feds fall all over themselves to throw our tax dollars at you. Buy a house you can't really afford, never mind the feds will finance it for you at taxpayer expense. But work hard, attain some level of success and then exercise fiscal responsibility and all we get from Congess is a big F#@K YOU!

The middle class pays an egregious amount of tax. We're in higher tax brackets based on what earn, but lack the resources and tax shelters of the rich; so we're left paying more than those less fortunate than us and more than those more fortunate than us. If anyone needs a f@#king tax break is it us, the middle class. But yet again, we're left out in the cold.

As you can probably gather, I am mad as hell about this and I'm not going to take this sitting down. I'm getting ambiguous information on the state of the bill in Senate at this point, but if hasn't passed yet, I am going to call my Senators and give them a piece of my mind. If it has, I am going to place a call to W's office, supporting his presumptive veto. Once I get this sorted out, I will post my efforts to this site.

I am going to be damned clear that the tax credit phase out, as written, is affront to the middle class in America. I am going suggest either doing away with the income restriction all together, raising the limit to $125,000 per indiviual or $250,000 for a couple--that is to say, inclusive of the middle class.

Once I get this sorted out, I will post what I've found and names and numbers of those we need to hold account here.

This is bullshit and I am not going to take it any more.

You shouldn't either.

Why are OC Inventories Flat?

I've seen some anecdotal evidence that inventory levels of are essentially flat since the end of January this year and on year-on-year basis as well. This causes me a great deal of cognitive dissonance; it may do the same to you.

As examples, I'll site the inventory graph from IHB which show inventory levels flat for Irvine and the OC inventory numbers found on Bubble Tracking which show inventory flatness for OC.

If you have a close look at the OC inventory data, what you're going to see is that according to Redin on Jan 30, 2008 there were 17,151 homes for sale in OC; on April 30 there were 17,358. A couple of hundred more homes in April than January, a bit more than 1% which I would call essentially flat. So for the year, inventories are essentially flat.

Even if you don't consider the 1% increase to "flat", I'd point out that in the same period in 2007, we saw inventories rise 28.5% rise from roughly 13,200 units to just under 17,000 units and that historically a rise in inventories as we enter Spring is typical. But this year we don't seem to be having any seasonal run-up inventories.

And, I'm sure you've already noticed the coincidence that we have roughly 17,000 homes for sale both now and one year ago as well, meaning of course that inventories on OC are flat on a year-on-year basis as well.

I have to say this is strongly counter-intuitive to me. I mean, we have only a trickle of homes being sold compared to last year and I would expect almost every other year on record, showing that demand is weak. On the other hand, we also have a glut of bank-owned, short-sale, foreclosure-avoidance properties on the market meaning that supply, at least for those segments of homes, is strong.

So, I pose these questions to readers:

Doesn't weak demand and strong supply at least [i]imply[/i] that inventories should be on the rise?

And if not that, then shouldn't we at least have our normal, seasonal run up of inventory?

Is it the case that a lack of "discretionary" home sales have lead to stable levels of inventory?

Does anyone have any OC-level data that shows something different? Maybe from the MLS?

Any information or insight would be welcome.